EXCLUSIVE: Samsung SDI, GM to raise Indiana battery investment to $4.4B

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EXCLUSIVE: Samsung SDI, GM to raise Indiana battery investment to $4.4B

Published: 17 Nov. 2023, 05:16 Updated: 28 Apr. 2024, 17:03

SARAH CHEA
chea.sarah@joongang.co.kr

A joint investment of Samsung SDI and General Motors (GM) into an EV battery plant in Indiana could rise to $4.4 billion from its initial $3 billion for a potential increase in production capacity.

The news comes as competing Korean battery makers are slowing down their investments — and even laying off workers from their U.S. plants — as part of efforts to cut production amid waning demand for EVs.

A Samsung SDI's joint venture with GM will garner “a projected investment of $4.4 billion,” according to the St. Joseph County Office's website.

Samsung SDI initially announced that it would spend at least $3 billion, in partnership with GM, to build a battery plant in St. Joseph County, Indiana.

“The increase in investment will likely come as Samsung SDI intends to expand production capacity in the plant,” said a source with knowledge of the matter.

Previous announcements indicated that the plant would have an annual production capacity of 30 gigawatt-hours, which could be used to manufacture 300,000 EVs.

Samsung SDI CEO Choi Yoon-ho, second from left, and Eric Holcomb, governor of Indiana, pose for a photo during the latter's visit to the battery maker's manufacturing plant in Cheonan, South Chungcheong, last August. [YONHAP]

The county website also indicates that “substantial completion” of the facility is expected in December 2027.

Substantial completion refers to the stage when a construction project is deemed sufficiently completed in terms of the number of production lines and importation of equipment, though the operations can start before this stage is reached.

“Operation will start in 2026, as stated in the initial plan,” said a spokesperson for Samsung SDI.

The New Carlisle plant will be Samsung SDI's second battery-making plant in the United States. The company is already building a $2.5 billion battery plant in Kokomo, Indiana, with Stellantis.

The two firms recently announced an additional $4 billion battery plant, which will be located right next to the Kokomo project.

The expansion announcement comes soon after LG Energy Solution and SK On announced layoffs and furloughs, respectively, and delays to their plant operations, due to faltering EV sales.

Choi Yoon-ho, left, CEO of Samsung SDI, and Mark Stewart, COO at Stellantis North America, shake hands after signing an agreement to invest $2.5 billion in building an EV battery factory in Indiana. [SAMSUNG SDI]

LG Energy Solution said Tuesday that it will lay off 170 workers from its plant in Holland, Michigan, while SK On said that it will furlough an undisclosed number of employees from its Georgia plant.

LG Energy Solution's joint battery plant with Ford and Koc Holding has been scrapped, and the start of the production of its joint battery plant with GM in Tennessee has been delayed by a few months. The Tennessee plant in Spring Hill, which was set to be operational at the end of 2023, will now start operations in early 2024.

SK On also pushed back the operation of its Kentucky plant — which is a joint venture with Ford — amid weakening EV sales.

Samsung SDI, meanwhile, confirmed that “no layoff or furlough is planned for now” from its overseas plants.

As of the end of September, Samsung SDI was the world's seventh-largest battery maker, with 4.5 percent of the market share, according to data from SNE Research. Its major clients include BMW, Audi and Volkswagen.

Samsung SDI recently signed a seven-year supply deal with Hyundai Motor for its EV lineups that are bound for the European market. Starting in 2026, Samsung SDI batteries will be used to power around 500,000 EVs.

The size of the deal has not been disclosed, though local reports predict it to be around 5 trillion won.

BY SARAH CHEA [chea.sarah@joongang.co.kr]